Just over half of New Zealanders over the age of 15 years were in debt in 2015. This debt included real estate loans, education loans, and other loans including consumer durable loans (consumer durables typically include cars, motorcycles, boats, and household appliances). Of those reporting a debt, the average debt was just over $79,000 per person.

This article provides insight into:

who had this debt

the type of debt they had

how their debt compared with their assets.

Data used in this article was collected as part of the Household Economic Survey for the year ended June 2015 and released in June 2016 under Household Net Worth Statistics: Year ended June 2015. Figures on real-estate-related debt were derived based on an individual’s share in the property as reported by them in the survey.

Middle-aged New Zealanders have the most debt

Middle-aged New Zealanders in the 35–44-year age group are the most debt laden (see figure 1). Not only are they most likely to have a debt, with around 7 in 10 saying they had a debt, but they also carry the highest average debt ($109,000). The proportion of people with debt gradually declined after age 44, with almost 3 in 10 in the 65+ age group saying they still had a debt. Young New Zealanders were also less likely to have a debt, with almost 4 in 10 aged 15–24 saying they had a debt.

Figure 1

Of people reporting a debt, those in the 35–44 and 45–54 age groups combined carried about 55 percent of the country’s total household debt. As people generally tend to pay off their liabilities as they get older, the average debt of people aged 65+ had reduced to $44,000. Young New Zealanders aged 15–24 years tended to have the least debt, with an average of $22,000 borrowed. Low debt levels in this age group is largely due to the fact that those in this age group either had little or no investment in real estate.

Most debt tied in real estate

Of the total individual debt, real estate loans accounted for 87 percent. Education loans and other loans (including loans on consumer durables, investment-related loans, and other miscellaneous loans) accounted for just 6 percent and 7 percent, respectively.

While about one-third of those in the 25–44 and 45–64 age groups reported having a loan on owner-occupied property, those in the 45–64 age group were more likely to have a loan on other real estate properties, including investment property (see figure 2).

Figure 2

As people age, they tend to pay off their loans on owner-occupied property but still have loans on other real estate properties. For those reporting a real estate debt, the average loan on owner-occupied property dropped from $145,000 in the 25–44 age group, to $107,000 in the 45–64 age group. Across the same age groups, the average loan on other properties remained at about $176,000. About 1 in 10 individuals aged 65+ said they still had a loan on owner-occupied property.

Other loans and liabilities were most prevalent in the 25–44 and 45–64 age groups. About 41 percent and 37 percent, respectively, of people in these age groups reported having these loans. This compared with 21 percent for those aged 65+ and 16 percent for those aged 15–24.

Education loans were most common in the 15–24 age group. Of those in this age group who reported having some debt, about 78 percent said they had an education loan. Education loans accounted for 70 percent of the total debt owed by the 15–24-year age group. The number of people with an education loan dropped sharply after age 44.

New Zealanders have high equity in real estate

It is also important to see how people’s debt compared with their assets. Most New Zealanders had enough asset value to offset their liabilities (see figure 3). The average New Zealander aged above 15 years had 12 cents of debt for each dollar of asset. Real estate loans were well offset against property assets, with only 29 cents of liability for every dollar of asset held in real estate.

Those in the 15–24-year age group had the highest debt compared with their assets (47 cents of debt for each dollar of assets). This is to be expected, given that most debt for this age group related to education loans and they have not built-up monetary investments or property.

Despite having the highest liability ($109,000 per person), individuals aged 35–44 years had just 26 cents of debt for each dollar of assets. Those aged 65+ had the lowest debt-to-asset ratio – just 2 cents of liabilities for each dollar of assets, as they had already paid most of their debts by this time, while accumulating assets.